Books on Romania
% of GDP
Update No: 092 - (01/01/05)
The mayor wins; Trajan recidivus
The presidential election in Romania on December 12th has been won by the mayor
of Bucharest, Traian Basescu, 51% to 49%. He represents a break with the
communist past, with which his defeated rival, the current premier Adrian
Nastase, is indelibly associated. He has had the support of the educated middle
class, who fervently want to see Romania part of Europe.
His very name is suggestive of Romania's European future. Trajan was the Roman
emperor who incorporated Dacia, as it then was, into the Roman Empire in 117 AD.
The language and culture of Romania have remained latinate ever since.
Nastase had the support of the small farmers, who fear, not without reason, that
they have most to lose from EU regulations. But Nastase, like Basescu, is a firm
advocate of EU membership, as are virtually all Romanians, highly conscious of
their Latin origins.
The surprise victory of Basescu, therefore, will produce no great change of
policy on Europe. Nor is it likely to engender any great change in the approach
to Romania's paralysing problems. The fact is that it is afflicted with
pervasive corruption and an absence of a proper rule of law. There is no
independent judiciary or protection for the media.
The deadlines to improve these criteria of democratic adequacy were relaxed by
the European Commission, given the need to have a reasonably-held election.
Justice and Truth
The victor's party, Justice and Truth Alliance, is deemed less venal than the
former communists. But during the opposition's brief spell in power in the late
1990s it made little inroads into the major problem of corruption. A corrupt
culture of party barons and millionaire oligarchs continues to dominate
political life. It will take decades to resolve this conundrum and the EU
commissioners are well aware of that.
Mr Basescu now faces the difficult task of forming a viable coalition
government. He will almost certainly ask his own centre-right Justice and Truth
Alliance to nominate a cabinet, which needs to be approved by parliament.
However, Mr Nastase's Social Democrats (PSD) won 189 seats in the 469 parliament
in December, while the alliance won 161. Mr Basescu has proposed his running
mate, Calin Tariceanu, of the National Liberal Party, as the next premier.
In the course of the campaign Mr Basescu promised to crack down on graft. He
denounced his rivals as villains and gangsters. "This is a dirty system
that destroys political opponents...but I tell them now: 'Boys, you cannot
destroy me!'" Time will surely tell!
Profile of the winner
Basescu campaigned on a tough anti-corruption platform and has a reputation for
being outspoken and down-to-earth. Born near Romania's main seaport of Constanta,
Basescu pursued a career as a sailor and commanded the biggest ship in the
Romanian fleet for six years. He was a rank-and-file communist party member.
After the bloody 1989 Romanian revolution which toppled communist dictator
Nicolae Ceausescu, Basescu got involved in politics and served as transport
minister in the 1990s.
In 2000 he became the mayor of Romania's capital, Bucharest, where he embarked
on a programme of rapid renovation in the decaying city. His can-do image is
reflected in a record of improvements for Bucharest, some of them achieved in
unorthodox ways. He led a crackdown on stray dogs and urban eyesores. "I am
elected by the people of Bucharest, not the dogs," he said, scornfully
dismissing the complaints of Western animal rights activists.
When the government blocked his plans for a new overpass and better central
heating for the city, he went over their heads and asked citizens to sign a
petition, shaming the officials into caving in.
He is one of the few Romanian politicians bold enough to speak up for gay rights
- an issue his opponents tried to use against him in the run-up to the election.
Mr Basescu's campaign had echoes of that of Viktor Yushchenko - the opposition
presidential candidate in neighbouring Ukraine, who brought thousands of people
onto the streets to protest against alleged election abuses. As in Ukraine, the
Romanian opposition made orange their main colour and the Ukrainian "Tak!"
("Yes") became the Romanian "Da!" as their main slogan.
Although the ruling ex-communist Social Democratic Party (PSD) took Romania into
Nato and prepared the ground for the country to join the EU in 2007, Mr Basescu
is seen as a more pro-Western candidate.
Unlike his opponents, whom he accuses of widespread corruption, Mr Basescu is
not associated with the old communist regime. His victory is likely to be
applauded in most Western capitals.
He has long been seen as the main challenger to the dominant PSD.
Car sales continue growth
New car sales recorded a 31.5 per cent increase to 113,751 units in the first 10
months of 2004 compared to the same period of 2003, the Association of
Automotive Manufacturers and Importers (APIA) said recently, Mediafax reported.
In October alone, 15,434 cars were sold, representing an 11.1 per cent increase
on the month before. Dacia sold 46,251 units in the first 10 months of 2004,
posting a 35.8 per cent rise from the same period of 2003, the APIA said.
Fitch upgrades Romania to investment grade
Fitch Ratings Agency said recently it had upgraded Romania by two notches to
investment grade, mentioning the progress made by the country's economy in the
last period. Fitch rated Romania's long-term foreign currency and local currency
sovereign ratings as BBB- and BBB respectively, from BB and BB+. Following the
upgrade, the Outlook is now Stable, said the rating agency, New Europe reported.
"The upgrade is supported by Romania's prudent fiscal policy, advances on
key structural reforms and good prospects for European Union accession,"
the rating agency said in a statement.
Fitch said most key public debt sustainability indicators compare favourably
with rating peers' and should continue to improve over the next two to three
Policy will remain guided by a new IMF programme scheduled to run until July
2006, and the exacting requirements of EU accession, which Fitch expects to
occur in January 2007, it said.
"EU accession remains a big driver of policy discipline and hence improving
credit worthiness," according to Nick Eisinger, lead analyst for Romania at
Fitch's Sovereigns team. Important breakthroughs in energy reform and
privatisations have earned Romania the functioning market economy status from
the EU and kept the January 2007 accession date on track.
There will be more focus on the implementation of the chapters following the
inclusion of 'safeguard clauses' to the accession process, and in some areas
considerable efforts will be needed to conclude negotiations.
FOOD & DRINK
PepsiCo's joint company buys Star Foods
Snack Ventures Europe (SVE), a joint company owned by PepsiCo and General Mills
announced recently it has taken over Star Foods, namely the largest producer and
distributor of snacks in Romania, the value of the transaction not being
disclosed, New Europe reported.
The purchase will ensure SVE a powerful position on the market in Romania, which
is the largest in the Balkans, a company release said.
World Bank lends US$275m to Romania
The World Bank has approved two loans totalling US$275m (€211m) to help
Romania modernise its transport system and agriculture industry, the bank said
recently, New Europe reported.
The transportation project, worth US$225m (€173m), is aimed at speeding the
transport of passengers and freight by building bypass roads in five large
Romanian cities and an integrated computer system for railway traffic, said the
bank in a statement.
The agricultural project aims to help farmers modernise their production
activities, as most farmers are unable to obtain bank loans, having small farms.
The improvements will help bring Romania up to European Union standards, the
bank said. Romania hopes to join the EU by 2007, added the bank. The World Bank
has granted Romania loans totalling over US$4.2bn (€3.23bn) in the last 15
years. The 2004-2005 lending programme amounts to about US$850m (€653m).